YOU can never have too much of a good thing - but I'll make an exception for our investment boom.

Here we are in the middle of it and GDP growth in the December quarter was anaemic.

But get this: the nation's income fell.

Producing more and earning less doesn't sound a sensible way to go, as I'm sure you'll agree. Export prices are falling but I blame gas. Which brings me to Wayne Swan, in the sense that he's always banging on about the boom in mining investment, though other thoughts did occur to me.

Advertisement

Did you know the three biggest projects by far, which will cost some $100 billion between them and probably more the way their costs are rising, are all about gas? In particular, liquefying it for exporting.

Apart from Origin's 37.5 per cent share of the Gladstone project, the projects are also foreign-owned, so you know where the profits won't be finishing up, though that's not my point. They use resources that might have served us better elsewhere.

My worry is there'll be a glut just as these projects start, um, letting off gas.

It's being drilled all over the place.

No wonder the price is dropping, everywhere but here that is. Somehow it's failed to flow through to the regulated domestic gas price but give it time. All right, a very long time.

China's resources minister happened to mention the other day that it'd have enough gas for the next 200 years if it could tap its shale reserves using hydraulic fracturing, which is known, not affectionately, as fracking.

What if it decides to sell LNG to neighbouring Japan, our biggest customer? Oops. Meanwhile, the US is fracking shale gas like rabbits. No market for us there and more likely a global gas glut or, as Canberra would say, a GGG.

I know it's the perfect replacement for coal or oil but there's hardly a country that isn't fracking about with gas. Qatar might have put its name on the map for hosting, or perhaps not, the 2022 FIFA World Cup, but its biggest accomplishment is being the world's biggest LNG exporter. See what I mean?

Having an investment boom so lopsided toward gas that iron ore and coal barely register poses an economic risk we could well rue one day.

And that's not counting how high it's helped push the dollar - more in anticipation of what's to come than the reality of extra production, it should be said - at a heavy cost to the other miners, not to mention the rest of industry. There's an economic rule that the same price should apply wherever something is sold after adjusting for transport costs and what-not.

It's known as purchasing power parity and comes with a complicated calculation which you're welcome to try at home - but, to save time, the dollar is 30 per cent overvalued.

Commodity prices are to blame - or thank if you're shopping online or planning a trip - except, as they're sinking, something odd has happened. Government bonds have become the unlikely lure for foreign funds and even central banks.

They can't get enough of them because they're among the select few that are AAA-rated. Hmm, there's a thought. The government could do a nice line in flogging 20- or 30-year bonds paying 3 per cent or 4 per cent interest and putting the proceeds in a higher paying term deposit.

On second thoughts, it'd just push the dollar even higher.

Mind you, it's going to have to borrow more anyway if company tax receipts keep shrinking because of a gassed-up dollar.

The same goes for the mining tax, if it ever happens. Since commodity prices are falling, made worse by a strong dollar, and mining costs are rising there's no way there'll be super profits to tax.

Remember it only applies to iron ore, nobbled by BHP Billiton and Rio Tinto to the point where it's no more than a minor book-keeping nuisance, and coal where, if anything, losses are in prospect. Which suggests the government needs the dollar to lose some gas just as much as business.